The importance of sectoral distribution of foreign direct investment - The situation in Albania

AuthorLorena Çakërri
PositionUniversity 'Ismail Qemali 'Vlorë, Albania
Pages167-177
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
Vol. 2 No. 2
June, 2018
ISSN 2519-1284
Acces online at www.iipccl.org
167
The importance of sectoral distribution of foreign direct investment - The
situation in Albania
PhD (C.) Lorena Çakërri
University “Ismail Qemali “Vlorë, Albania
Abstract
Over the last few years there has been an increase in the importance of the share of foreign
direct investment in developing countries. This increase, theoretically, is also due to the many
positive e ects that these investments bring to the host countries. But many empirical studies
show that this e ect is not always positive. These di erent e ects come as a result of the
fact that these studies are based on aggregated data on FDI. Distribution by foreign direct
investment sectors would be a more accurate way to understand the importance of foreign
direct investment. In the world, the largest share of foreign direct investment is oriented
towards the service sector. The purpose of this paper is to explain the importance of the sectoral
distribution of foreign direct investment and to explain how foreign direct investments in
Albania have been distributed by sectors and the e ects brought in the albanian economy,
through a comparative analysis based on secondary data published by various institutions
such as the Bank World Bank, Unctad, Bank of Albania, Institute of Statistics, etc
Keywords: foreign direct investments, service sector, employment, priority sectors, added
value.
Introduction
Numerous theoretical studies explain the positive e ects of foreign direct investment
in the host country. However, the e ects of FDI on host country economic growth
are more con rmed by theories than they nd support in empirical studies. Despite
the large number of empirical studies on the e ect of foreign direct investment on
economic growth, the ndings are still not always clear (Iamsiraroj and Ulubasoglu,
2015).
These di erences in empirical studies on the impact of FDI on economic growth is
a ributed to the use of data on foreign direct investments totaled, as similarly stated
by Alfaro and Charlton (2013). Empirical work mainly uses aggregate FDI data, while
the e ects of foreign direct investment also depend on the sector where FDI in ows
are experienced (Alfaro and Charlton, 2013). This is because the proliferation of many
of the expected positive e ects of foreign direct investment accepted in theory as
the potential for technology transfer, increased competition in the host country, etc.,
vary from the sector into which foreign investment is entering. The World Investment
Report 2001 (UNCTAD), theoretically arguments that the impact of FDI is di erent
depending on the economy sector. The e ect of FDI varies because the sectors have
their characteristics and relate di erent to other sectors in di erent ways.

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